Yields on the bond markets have fallen slightly recently. The German federal bond, which is crucial for Europe, recently had a ten-year yield of 2.4 percent, after 2.7 percent in May and June. For two years there is still a return of just under 2.7 percent; in May and June more than 3 percent was usual. If you want more returns, you have to increase the risk. “In this environment, you can focus on the higher-yielding market segments such as high yield and AT1 bonds,” says Mohammed Kazmi, macro strategist and fixed income portfolio manager at Union Bancaire Privée (UBP). “In addition, floating-rate bonds still make sense, even though central banks have already passed the interest rate peak.” In his opinion, holding government bonds represents less of a hedge for portfolios in the current interest rate reduction cycle, which is taking place amidst robust economic growth and comparatively high inflation .
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